Who can and can't contribute to a party committee

Who can contribute

Individuals

An individual may make contributions to party committees, subject to limits.

Minors

An individual who is under 18 years old may make contributions to party committees, subject to limits, if:

• The decision to contribute is made knowingly and voluntarily by the minor;
• The funds, goods or services contributed are owned or controlled by the minor, proceeds from a trust for which he or she is a beneficiary or funds withdrawn by the minor from a financial account opened and maintained in his or her name; and
• The contribution is not made using funds given to the minor as a gift for the purpose of making the contribution, and is not in any way controlled by another individual.

Partnerships

A partnership may make contributions to the state, district and local party committees of a particular state party (combined limit) and to a national party committee. A contribution from a partnership is attributed to the partnership and to each partner’s share of the firm’s profits or by agreement of the partners.

In some cases, limited liability companies (LLCs) are treated as partnerships. For the purposes of contribution limitations and prohibitions, an LLC is treated as a partnership if:

• It does not have publicly traded shares; and
• It has chosen to file, under IRS rules, as a partnership; or
• It has made no choice under IRS rules, as to whether it is a corporation or a partnership.

Who can’t contribute

A political committee is prohibited from knowingly accepting a contribution that violates the prohibitions on contributions.

Corporations and labor organizations

The Federal Election Campaign Act prohibits corporations and labor organizations from making contributions in connection with federal elections. (A corporation or labor organization may pay the expenses of setting up, administering and soliciting contributions for its own political committee, called a separate segregated fund (SSF or PAC). A party committee may accept contributions from a corporate or labor PAC registered with the FEC.) This prohibition applies to all types of incorporated organizations, except political committees that incorporate only for liability purposes. National banks and federally chartered corporations, such as federal savings and loan associations, are prohibited from making contributions in connection with state and local as well as federal elections.

Contribution reimbursements

A corporation or labor organization may not reimburse individuals who make contributions to a political committee, for example, through a bonus, expense account or other direct or indirect compensation.

Extensions of credit

An extension of credit to a political committee by an incorporated commercial vendor is a prohibited contribution unless the credit is extended in the ordinary course of business with terms substantially similar to those given to nonpolitical clients of similar risk. A prohibited contribution can also result if a corporate vendor extends credit for longer than the normal practice in the vendor’s business or if the vendor fails to make a commercially reasonable effort to collect payment on the debt.

Forgiveness or settlement of a debt owed by a political committee must comply with the debt settlement procedures.

Discounts

If an incorporated commercial vendor sells goods or services to a committee at a price below the usual and normal charge, a prohibited contribution results in the amount of the discount. (There is, however, an exception for discounts offered by vendors of food and beverage.) A reduced price is not considered a prohibited discount; however, if it is offered by the vendor in the ordinary course of business at the same amount charged to nonpolitical clients.

Compensation for services

If a corporation or labor organization pays for services rendered to a committee, a prohibited contribution results.

A corporation or labor organization may, however, provide free legal and accounting services to a party committee.

Partnerships with corporate members

Because contributions from corporations are prohibited, a partnership with corporate members may not attribute any portion of a contribution to the corporate partners. A partnership comprised solely of corporate partners may not make any contributions.

Federal government contractors

Federal government contractors are prohibited from making contributions or expenditures in connection with federal elections.

Foreign nationals

Federal law prohibits contributions, donations, expenditures(including independent expenditures) and disbursements solicited, directed, received or made directly or indirectly by or from foreign nationals in connection with any federal, state or local election.

Contributions in the name of another

Contributions made by one person in the name of another person are prohibited, and no one may assist someone in making such a contribution.